Wednesday, 4 January 2017

Progress of green energy corridor very different on paper and on ground: Mercom Capital

My View:

The Government should take necessary step to promote green corridor. It will help to reduce transmission losses and improve the quality of power if renewable power travels through green corridor. There are various Power transmission companies which will be interested to invest in green corridor if the tenders come out in faster pace and the policies become more business friendly.

News:The critical green energy corridor, which is important to evacuate renewable energy, is still far from reality and solar power project developers believe the current grid infrastructure is inadequate to handle the increased capacity, solar sector research firm Mercom Capital today said in a report.

“For a project that has already had its share of delays and is being touted as the cure-all for grid issues, the renewable energy sector is skeptical if it will get done in time to make an impact,” Mercom said.

The solar power sector is expected to add close to 9 Gigawatt capacity in 2017 as against 4 GW added in 2016 and this more than double capacity addition would require a better transmission infrastructure.

“The infrastructural development under the green energy corridor is slow; it is not at par with the pace of tenders coming out. Over the next three quarters, solar projects of approximately 9 GW are expected to be commissioned, but the grid is not ready to handle the power produced. The progress of green energy corridor on paper and on the ground is very different,” the report said.

Mercom said the government should provide compensation for projects on standby after they have been commissioned or developers will pay the price.

The project is under implementation in Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, and Tamil Nadu. Once complete, the green energy corridor is expected to facilitate evacuation from solar parks and large-scale grid-connected solar and wind projects.

The report further said solar project developers across the country are struggling with evacuation and transmission issues which account for huge losses and contributes to increased project costs.

“Developers are concerned about solar park integration into the grid as the evacuation system and infrastructure is not yet ready. Due to inadequate transmission lines and grid infrastructure, planning for the next batch of auctions has yet to begin and developers don’t know where these projects will be located,” the report said.

It added that according to some developers, tenders are released in some states without consulting the state electricity regulatory commissions. When power purchase agreements go to regulatory commissions for approval they are getting held up because the SERC is citing a lack of transmission infrastructure.

The Power Grid Corporation of India is developing the inter-state transmission corridor and the state transmission utilities are responsible for setting up and strengthening the intra-state transmission infrastructure. The MNRE will be providing 40 per cent of project costs in the form of a grant. The PGCIL has estimated that the cost to develop the corridor comes to Rs 380 billion.

The green energy corridor is expected to boost the inter-state sale of renewable energy, and coupled with the waiver of Inter State Transmission System charges, renewable energy costs are forecast to come down enough to help states fulfill their renewable purchase obligations and meet energy demand.

The corridor is expected to address certain limitations of renewable energy like intermittency and variation in power quality. Under the project, renewable energy management centres are being set up to predict renewable power generation and demand. These centres will also be interconnected with load dispatch centers to gather real-time information, as well as monitor and control capacity addition, according to CEA.

The GEC is also expected to address the curtailment of renewable energy in the future, Mercom Capital said.